Be ready for that big outsourcing question

The marketplace in HR outsourcing is growing. If two huge organisations like BT and Andersen Consulting are getting into bed together to provide HR services to Britain’s biggest employers from your chief executive – why do we need an HR department at all? Can’t we use these heavyweights to yield significant cost savings and make the business more efficient?

These two blue-chip companies will have done their homework very thoroughly and if they have decided that there is a lucrative market for outsourcing, even though there are other major players in the field, the demand must be there.

As we report, it is the first major development in private sector HR outsourcing since BP Amoco announced a £370m deal with American company Exult six months ago.

So the future looks bright or bleak depending on which side of the outsourcing fence you are sitting on.

There is no getting away from the fact that outsourcing is seen as a threat to the profession as it represents major change. In local government, for example, the HR function is concerned by the involvement of such big players. Best Value forces it to look for the best deal for the public and if the marketplace can provide a saving for the public purse then local authorities cannot ignore it.

But in business, change is a good thing and the personnel profession has proved it is pretty good at managing change.

And there are positive sides to outsourcing. It means that a lot of the day-to-day administrative burden can be handled by a third party. This should make it easier for HR to provide the kind of strategic advice that organisations need to work effectively.

There should still be someone in the organisation who is taking an overall view of the company and who understands its culture and internal workings.

One thing is certain: get your responses ready when the chief executive asks you that 10 million dollar question (again) at the next board meeting.